§ The House resolved into Committee of Supply.
§ The Chancellor of the Exchequer
must, he said, in the execution of his duty, crave the attention of the Committee to the statement he was about to make, promising to be as brief as circumstances would permit—as clear as the subject and his intellect would enable him to be—and undoubtedly as sincere as he ought to be in dealing with a matter of so much importance. There was no Gentleman whom he had the honour of addressing who must not be aware, from the papers laid before the House, what were the prospects of the present year, and what had been the state of the public revenue and expenditure in the last year. There was nothing in that state to create any degree of permanent apprehension, yet, at the same time, there was undoubtedly much which must be for the time a matter of regret. The past year had been, as hon. Gentlemen knew, a year of increased expenditure and diminished receipt, and the result was that which appeared on the balance-sheet—viz., a considerable deficiency at the present moment in the public revenue as compared to the expenditure. It was curious, that the studious man, thinking on a subject of this kind in his closet, sometimes anticipated, by means of his theoretical calculations, that result which was afterwards made manifest by the production of the public accounts. In a book lately published, written by a gentleman of the highest possible authority, Mr. Tooke, there appeared so perfect and accurate a description not only of the existing state of the revenue and of the expenditure of the country, but also of the causes which had led to that state, that with the permission of the Committee he would read the passage. The right hon. Gentleman read the following passage from Mr. Tooke's book on prices, vol. ii., page 278:—The revenue has experienced a falling-off in the past year, as compared with the preceding, But, independently of the operations of the tea duties, there is reason to believe, that the revenue of the preceding year was an inflated one. It is quite clear, that a period of speculation must be attended with an increase of revenue; for, not to mention the operation of over-trading, it may be observed, that when prices have been rising for some time, the tendency to anticipations of a further advance, in other words to speculation, extends itself to retail dealers, who, under such circumstances, are induced to enlarge their stock. This causes entries for consumption, 1367 and consequent payment of duties, in the expectation of a continuance of the increasing ratio of demand. Such was probably the case in 1835–6. When, however, the event proves that the demand for actual consumption does not equal the exaggerated expectation, the dealers are disposed to run off their old stock before they make fresh purchases; and the difference between a disposition and an indisposition on the part of dealers, as well retail as wholesale, and of manufacturers to get into stock, or in other words, the difference between an anticipation and postponement of demand, is very great, not only upon prices, but also upon the revenue.He could assure the Committee, that the circumstances stated in the passage he had read, which, on general reasoning, were considered as likely to take place, might be shown, by a comparison of the last two or three years, to have actually occurred. It appeared, that at the period before the commercial pressure was felt, there was every tendency to increased receipts in the revenue, as there was at the present moment a tendency the other way, because it was obvious to every Gentleman, that the operations of the revenue were of such a nature, that they succeeded the general action on prices; and this phenomenon was often exhibited, that there would be a period of increased revenue contemporaneously with commercial pressure, and a deficient revenue when prices were rising. The commercial crisis through which the country had lately gone, and which had shown itself in the state of the revenue, had not led to the same calamities as those exhibited in 1825; and, considered in all its bearings, its mitigated effect might be said to have arisen from the great augmentation of the resources of the country, from greater preparation in meeting the pressure, and from the country being in possession of more wealth and more capital. There had been, too, a succession of years of greater prosperity than known before in the memory of man. Taking the period from the year 1830 up to the commencement of the commercial pressure, there never had been a period of greater or more invariable manufacturing and commercial prosperity. Such was the condition of the trading interest of the country at the time of the pressure; and it was also to be recollected, that at the commencement of the late difficulties there had been a vast deal of speculation afloat, and a large amount of capital had been invested in railroads, foreign stocks, and other securities. Nevertheless, such were the power and the 1368 resources of the country, that even when the crisis came, the country was able to bear up against it with infinitely greater strength, and to meet the pressure with much less suffering, than in 1825. Consequently, in the midst of all difficulties, there was this consolatory circumstance—that there had not happened, as in 1825, a suspension of payments by seventy or eighty banks, and extensive failures in the commercial world. At the same time, it was not his intention to undervalue in the slightest degree the amount of the late commercial embarrassment, and the effects it, had produced on the manufacturing industry of the country; nevertheless, he said, that the result of the trial to which the trade and commerce had been subjected, proved, that there had been an addition to the capital and to the resources of the country—a circumstance which must afford general satisfaction and ground of future hope. But, admitting that the pressure was great, as indeed appeared from its effect on the revenue, still it must be confessed, that it was accompanied by circumstances calculated to create much alarm—viz., the course of the exchanges, and the demands on the Bank of England for treasure. The existence of the pressure had been made manifest in another, and not unimportant, way: there had been a considerably increased demand of money from the saving banks of the country: the balance was turned at that period, and in place of the receipts increasing, the amount of the money drawn out considerably exceeded the amount of the deposits. Such had been the state of things, but he now had a right to say, that the prospect was improving. And not only that, that those very experiments to which he had referred as marking the general condition of the country would now lead to the inference of an entirely opposite kind. He had dwelt on these considerations because it was material, that the Committee should accompany him throughout his statement, for the purpose of ascertaining whether his hypothesis was or was not correct, that the present depressed state of the revenue had either diminished or ceased, and that it was not connected with causes of a permanent character. In like manner, when he came to deal with the expenditure, and showed an increase on that head, it would be for the Committee to determine, whether it would be right to consider that increase of a permanent or of a temporary nature—in 1369 short, to say, whether the two disadvantages with which they had at present to contend—diminished receipt and increased expenditure—were permanent in their character, or only temporary and transitory, as he contended. The operation of the commercial crisis, which had been attended by a diminution in the demand for our manufactures and exports, had of course shown itself in the diminished receipts for the year. Taking the actual amount of the income, omitting from the account the Bank balances, and other items not so materially connected with the actual income of the country, it appeared, that in the year 1836–7 the receipt was 48,340,000l.; and in 1837–8 the receipt was 45,880,000l.; showing a difference between the two years of no less a sum than 2,532,000l. Undoubtedly that, in the first instance, appeared a most alarming diminution; and if the Ministers considered it to be of a permanent character, it would undoubtedly be their duty either to see whether the expenditure could be reduced to such an extent as would meet the diminution of income, or else to make a proposition which would add to the burdens of the country. He, however, trusted, that he should be able to make it clear to the Committee, that the diminution of income was not of a permanent character, and could not inspire any well-founded alarm. Before he went into an analysis of the income, he wished to make some observations on the expenditure of the country. He had already stated, that the present year was one of diminished income and increased expenditure; and he hoped, that hon. Gentlemen would bear in mind, that the Government had had to provide for the whole of the interest on the West-Indian loan. amounting to 750,000l., which had been paid without the imposition of a single additional tax. This circumstance ought to be taken into consideration in instituting a comparison between the expenditure of the past and the previous year. There had also been in the course of the present year an increase of expenditure connected with Canada. A right hon. Friend of his on the opposite benches (Mr. Goulburn) had on a former occasion asked the Government to give some information on this point; but it was then out of his power to give a precise answer, and even at the present moment he was not able to state the amount with certainty, though he would endeavour to give the best explanation he could. There was an increase, as hon. 1370 Gentlemen might see, upon the estimate of the present year; besides which there was an increase of expenditure from Canada, which showed itself in draughts on the Treasury on the part of our commissariat. The bills which had been drawn fell due in the months of January, February, March, April, May, and June, for the service of the provinces, and amounted to 467,546l.; and there were further outstanding bills amounting to 6,260l. This appeared to be the state of the case when the last advices were received. In addition to that, there was a sum to be repaid to the commissariat from the Canadian treasury, amounting to 100,000l., and a further sum of 108,000l. remitted in dollars from Jamaica and Vera Cruz, making a total amount of 681,000l. to be provided for on account of Canada. He was merely stating facts, and he should ill discharge his duty if he were to be led astray into the discussion of the general policy of the Government with respect to Canada. He was not in a condition to be able to say, that the whole of the sum he had mentioned had been expended; of course it had not, because the military chests were recruited to a considerable excess over the ordinary provision made for the Canadian expenditure. But the hon. Gentleman opposite having asked what proportion the present draughts on the Home Government bore to the amount of draughts in ordinary years, he would endeavour to give some information on that point. The average expenditure for Canada in the year immediately preceding amounted to 205,000l., so that the amount of the draughts for the months he had just mentioned (681,000l.) might be compared with the average annual expenditure of 205,000l. But the Committee would bear in mind that now a much larger provision was made; in the first place, our military chest was necessarily much better supplied, and in the next our commissariat must have greater resources at command in proportion as the force in Canada was augmented. He did not think, therefore, it would be fair to assume that the proportion would be as 205,000l. for the whole year, and 681,000l. for six months. He did not think that that would be a just ratio. He was not able to state with any accuracy the exact condition of the expenditure, because, as he had on a former occasion said, it was utterly impossible to proceed with the ordinary commissariat. There was a general necessity 1371 felt of arming irregular troops, and establishing an irregular commissariat, but there had been since organized by Sir J. Colborne a regular commissariat, and a board of officers formed, which was charged to investigate the whole of the accounts, and he hoped before the Sessions terminated he should be in possession of more positive information on the subject. The Committee ought also to take into account that there was among the payments of the year an additional charge of 200,000l., which arose quite unexpectedly. The Committee was aware that he had altered the time for the exchange of Exchequer-bills. On grounds which he had explained to the House, he felt the necessity of having the exchange of Exchequer-bills fixed for a period when Parliament was sitting. The circumstances under which the September exchange of Exchequer-bills took place in 1836, when 12,000,000l. were to be at once provided for, proved to him that it was not safe that a considerable exchange of Exchequer-bills should take place when Parliament was not sitting. The effect of the alteration had been to cast on the expenditure of last year the sum of 200,000l., which, under ordinary circumstances, would not have been paid until the June exchange; therefore, they had not only the extra charges with respect to Canada, but also a charge of 200,000l. which properly belonged to the current year, and which they had, in point of fact, paid by anticipation. There was a third ground of increased expenditure with which the Committee was familiar—he alluded to the increased charge of interest on Exchequer-bills, which on the six quarters which had elapsed amounted to 396,000l. The effect of the rise in the interest on Exchequer-bills comparing the amount paid with what would have been paid at the rate of 1½d. a-day, amounted to 396,000l. Without anticipating a discussion which might arise on the motions given notice of by the hon. Members for Coventry and Kilkenny, he might say shortly, that he did not, on reflection, in any degree regret the rise of the interest on Exchequer-bills, considering the period at which that rise took place. He should endeavour to defend the step he took when it should be impugned; but when it was considered that he gave an explanation on the subject of increasing the interest of Exchequer-bills in the budget statement of last year, and that it provoked no attack, he thought it hardly fair, now that the object for which the increase of in- 1372 terest was made had been to a considerable extent answered, that hon. Gentlemen should begin to attack a measure in which they before seemed to acquiesce. Those hon. Gentlemen appeared to think that they could meet the whole question by saying, "You are paying an interest of three per cent. for the money which you obtain upon public securities, when plenty of money can be had in the city at two per cent. interest upon private security;" and thence they inferred, as public security was better than private security, that if money could be obtained at two per cent. upon the latter, the Government ought to obtain its loans upon Exchequer-bills, not at three per cent., but at a lower rate than two per cent. He would leave it to the hon. Gentleman, when the proper time came, to work out that proposition. The hon. Gentleman knew very well that 3l. 6s. was the rate of interest at present paid upon Consols, and he must also know very well that if the general rate of interest upon money in the city did not exceed two per cent., the price of money, as represented by Consols, would not be at the rate he had mentioned. But for any Gentleman to say, that the general value of money in the city for permanent investments did not exceed two per cent., exhibited a rashness of assertion that he had never heard exceeded in that House. He had endeavoured to show, that the present year was one of increased expenditure and diminished income; and he had stated the grounds which, in his opinion, had led to those two results. He would now proceed to compare his estimate of the income and expenditure of the past year with the actual result. He would begin by confessing, that his anticipation shad been disappointed. The estimate which he made for the revenue of the current year ending the 5th of April, 1838, amounted to 47,240,000l.; the actual income of the year had been only 46,090,000l. The estimate of the expenditure for the year ending the 5th of April, 1838, was 46,873,000l.; the actual expenditure had been 47,519,000l. so that the deficiency which at present existed was 1,428,000l. But there was another comparison which he had a right to institute in order that the real state of the finances of the country might be fully understood: He had made an estimate of the income of the year preceding, as well as the year following April, 1837; and there was upon the income of the one year an excess fully 1373 counterbalancing the deficiency upon the other. He therefore wished the House to consider how the income of the two years stood as compared with his estimate. [Mr. Hume: How is the calculation made?] The deficiency was arrived at by deducting the 46,090,000l. the actual income, from 47,519,000l., the actual expenditure, which left a deficiency in round numbers of 1,428,000l. But he wished to call the attention of the House to a comparison of the income and expenditure for the two years 1836 and 1837. The total estimated amount of income was 94,220,000l. for the two years, the actual income was 94,543,000l. The average of the estimated receipt of the two years was 47,110,000l., and the average on the real receipts 47,271,000l. Now with respect to the expenditure. The total estimated expenditure of the two years was 93,702,000l., while the actual expenditure was 94,109,000l. The average of the estimated expenditure was 46,851,000l., and of the actual expenditure 47,054,000l., showing on the average of the three years a considerable surplus of income. Therefore the House would see, that although there was a considerable deficiency on the income of the single year, yet there had been a considerable excess on the income of the previous year. Taking, then, his anticipation of the income and expenditure of the two years together, and comparing that anticipation with the actual results, so far from any deficiency appearing, there was, on the contrary, as much identity as could ever be expected on an estimate. He should now proceed; and the House would recollect, that of the whole amount of deficiency, 200,000l. was accounted for by the payment of Exchequer bills, which, under ordinary circumstances, would have been paid in June, but which, by a late arrangement, had been paid in March. He would now proceed to compare the prospects of the country in the past with those of the year ensuing. He had made his calculation in two ways. The one, which he thought was a fair one, upon an average of the last two years, taking the productive and unproductive years. He thought that would lead to a fair result; but, at the same time, not wishing to lead any one astray, he had also taken a wide range, and would give an average of three years, although that would be more disadvantageous for his purpose. Now, he would tell the House how the account stood. In the first place, taking the ave- 1374 rage at two years, he calculated the income from the Customs at 20,795,000l., from the Excise at 13,950,000l., from the Stamps, 7,000,000l., from the Taxes, 3,600,000l., from the Post-office, 1,600,000l., and from the miscellaneous, 279,000l. He had omitted the smaller sums and the fractions, but introducing them, the total amount would be 47,271,803l. The expenditure he calculated as follows, also expressing his calculations in round numbers:—The interest on the funded debt and on Exchequer-bills was 29,350,000l., and the charges on the consolidated fund 2,400,000l. making a total of 31,750,000l., Then came the expense of the army, which was 6,800,000l., navy 4,800,000l., ordnance 1,500,000l., and the miscellaneous 2,550,000l., making a total in exact numbers of 15,729,000l., which added to the charge for the debt and on the consolidated fund gave the whole expenditure at 47,479,000l. The miscellaneous services included a vote, in the nature of a vote of credit, for the additional expenses which had been incurred in consequence of the recent state of affairs in Canada. For the last five years no vote had been taken for army extra ordinaries, because such a vote was inapplicable to a state of peace, and because the accounts of the expenditure of such a vote were liable to many objections. Such votes, therefore, had been discontinued for a considerable period. But at the present moment, in reference more especially to the existing state of things in the Canadian provinces, he thought that the best and most legitimate mode of providing for an increased expenditure, in place of coming down to the House with an estimate, for the truth or accuracy of which they could not make themselves responsible, would be to state what they considered the probable amount of the expenditure would be, and to take at once a vote for army extra ordinaries to that amount. The sum he proposed to take under that head for the present year was 500,000l. That would be included in the miscellaneous expenditure. A comparison of the income and expenditure for the current year, founded upon an average of the last two years, would show, if his calculations were correct, that so far from having a surplus of revenue at the year's end, there would be a deficiency to be supplied of 208,000l. If hon. Gentlemen thought that the calculations of revenue which he had made were exaggerated; if they felt that he should do better by taking 1375 the average of three years rather than the average of two years, they would diminish the income side of the account still further, and would leave a deficiency, not of 208,000l., but of 505,000l. He himself believed, that calculations founded upon the two years' average would lead to a safe result; but, at the same time, as it might be argued that the other would be the better course of proceeding, he had determined to present the House with the double alternative, and to leave hon. Gentlemen to determine whether they would take the two years' average, with a deficiency of 208,000l., or the three years' average, with a deficiency of 505,000l. He had stated, that whether the calculations were founded upon a two years' average or a three years' average, the deficiency of income for the current year would at least appear to be 208,000l. The question then arose, how was that deficiency to be met? It certainly was not by a reduction of taxation, as had been proposed by the hon. and gallant Member opposite (Colonel Sibthorp). He wished the prospects of the country had been such as would have enabled him to propose a reduction of taxation. That, however, was impossible, seeing that, instead of having a surplus, there was under one view of the finances of the country, an actual deficit of 208,000l, and under another view a deficit of 505,000l. How, then, was this deficiency to be met? There appeared to him to be only two ways of meeting it, and the preference to be given to the one over the other of those two ways resolved itself into the answer which the House would give to the plain and simple question:—"Can this deficiency be considered as permanent in its nature?" If the House had any ground to apprehend that this small deficiency or any amount of deficiency would be permanent in its nature, there was but one way in which it could be met; and that was by coming boldly to the House of Commons, stating fairly the facts of the case, and asking, through the medium of increased taxation, additional means to meet and discharge the obligations of the country. From that course no Minister who entertained a just sense of duty could retreat—always presuming that he saw in the nature of the case presented to him a permanent, and not a transitory, diminution of the national income. At the present moment he thought every reasonable man who looked at the whole of the facts of the case would entertain as 1376 strong a confidence as any individual could do in future events that the depreciation of the national income was temporary, and the increased expenditure temporary also. If that were the case, then the very same reasons which should induce a Minister, if he thought the state of things which caused the depreciation to be lasting and permanent, to ask for an increased taxation, should, if he thought it merely temporary, dissuade him from taking that course. It was undoubtedly true, that in the interval of time which had elapsed since the formation of Lord Grey's Government (he would go no further back, because beyond that period the responsibility of those who were now in power did not extend); but in the interval which had elapsed since that time, the House had undoubtedly had some experience with respect to the reduction of taxation. In the years 1831 and 1832 the large reductions of taxation—most properly begun by the right hon. Gentleman (Mr. Goulburn) opposite, and afterwards followed up by Lord Spencer—led to a very considerable deficiency of income as compared with the amount of expenditure. In the October quarter of 1831 there was a deficiency of 20,537l.; in the quarter ending the 5th of January, 1832, there was a deficiency of 698,837l.; in the quarter ending the 5th of April, 1832, there was a deficiency of 1,240,412l.; and in the quarter ending the 5th of July, 1832, there was a deficiency of 1,263,187l.; but then the tide turned, and in the following quarter, namely, the quarter ending the 10th of October, 1832, there was a surplus of 467,291l. From that time the surplus continued to rise until October, 1837. The surplus on the first year after he (the Chancellor of the Exchequer) came into office, namely, in October, 1836, was 2,712,221l.; on the 5th of January, 1837, it was 2,130,092l.; on the 5th of April, 1837, it was 1,862,823l.; and on the 5th of July, 1837, it was 1,908,526l.; but from that time the depreciation went on more rapidly; and in October, 1837, there was a deficiency of 544,645l.; in January, 1838, a further deficiency of 655,760l., and on the 5th of April, 1838, an increased deficiency of 1,428,532l. But, as he had before stated, there was a continued surplus of income over expenditure during the whole of the period that intervened between October, 1832, and October, 1837; and as in October, 1832, after four successive quarters of depreciated income, the revenue again revived and afforded an im- 1377 mediate surplus, so, in the present instance, he had no doubt they should witness the same result. Already, he was happy to say, the revenue of the country exhibited symptoms of improvement, and before long he did not doubt to see it returned to its wonted prosperity. If, then, he was right in assuming that the deficiency, whether of 208,000l. or 505,000l., would be but of a temporary character, he would go further, and say, that it must be met not by coming to Parliament to add a permanent load to the taxation of the country, but by taking the same course that the Government had pursued upon former similar occasions, and which upon every such occasion had met with the assent and approval of Parliament. He wished for a moment to call the attention of the House to the state of things in the year 1827, when Mr. Canning filled the office of Chancellor of the Exchequer. He found, that Mr. Canning, in making his financial statement, estimated the receipts of the year (1827) at 54,600,000l., the expenditure, not including the sinking fund, at 51,800,000l., and the sum to be appropriated to the sinking fund at 5,700,000l., thereby leaving himself with a deficiency of 2,900,000l. The observations of Mr. Canning upon that occasion were as follow:—For the present year, then, the question which arises out of the statements which I have submitted to the committee—the question which they will have principally to consider—is, whether the present deficiency, which I have stated, in round numbers, to be 3,000,000l.—though it is now, and I think we have every prospect of its proving hereafter still more so, considerably less than I have stated it at—whether, I say, this deficiency shall be provided for by any extraordinary course, or whether, under the peculiar circumstances of the present year, it may not be the more expedient step to take a credit on the consolidated fund, and leave it to the year to come to determine what measures of a more decided character it may hereafter be necessary to resort to. This, Sir, is, of course, in other words, a proposal to add to the amount of Exchequer-bills, now outstanding. And the first question that arises on the suggestion of such a proposal is whether the amount of those bills now outstanding, be such as to bear this hypothetical addition; or whether it be at such a rate as would make it dangerous to run any risk, by pressing harder upon the amount already in the market. In order to come at this, it will be necessary, Sir, to examine the value which these bills actually hear in that market. The price at which 1378 Exchequer-bills are now selling is equivalent to a premium of 50s. upon every 100., that 100l. yielding an interest of three per cent. per annum. And such being the premium, this assuredly does not indicate any appearance of an over-stocked or labouring market. Then, Sir, as to the amount. The whole amount of Exchequer-bills, at present outstanding, is 24,000,000l. That amount would be increased, supposing the whole of the sum now apparently deficient to remain deficient at the end of the year—that is, supposing the revenue to go on for the remainder of the year at the same rate at which it has gone on during the four months last past; and supposing all the indications, I will not say of reviving prosperity, but of reviving activity in our trade and commerce, which we hear of from all parts of the country—supposing the information on this subject, which has been communicated to so many hon. Gentlemen, to be quite erroneous—supposing, in fact, the very worst—and the addition will make the whole amount of Exchequer bills outstanding, 26,700,000l.."*Mr. Canning had before him a deficiency of 3,000,000l. sterling, whereas the maximum of the deficiency with which he (the Chancellor of the Exchequer) had to deal at the present moment was from 208,000l. to 505,000l. The analogy between the two cases was in many respects singularly complete. Mr. Canning had to meet a possible increase of expenditure for the army, to be employed in consequence of the threatened invasion of Portugal, and for which he took a vote of credit; and the present Government had to meet an increased expenditure for the employment of troops in consequence of the insurrection in Canada, for which they now proposed to take a vote of credit. Mr. Canning stated, that be took that course on the ground that the amount of Exchequer-bills outstanding was lower than it was customary for it to be, which, therefore, made a vote of credit safe; the price at which they sold in the market giving a premium, and was such as showed that they were not in excess. He stated, that the amount of those bills was 24,000,000l.; the present amount of outstanding Exchequer-bills was also about 24,000,000l. He further stated, that the interest upon Exchequer-bills was between two and three per cent.; that was the interest which Exchequer-bills now bore. He likewise stated, that they sold at a premium of fifty shillings; the premium which Exchequer-bills at present bore was * Hansard (New Series), vol. lviii. p. 1106.1379 about that amount. Therefore, if it were safe and prudent for Mr. Canning to have taken the step he did in reference to a deficiency of no less than 3,000,000l. He trusted that the Committee would see, that there was no improper risk run, by adopting a similar course now; but that, on the contrary, he should be acting improperly towards the House and the country if, in order to meet a temporary evil, he asked either the House or the country to submit to a permanent imposition of a new tax. If, he repeated, it were safe on the part of Mr. Canning, with a deficiency before him of nearly 3,000,000l., to resort to a vote of credit, he thought he was justified in asking the Committee to venture upon the step now proposed in reference to a deficiency of at most 500,000l. He had already stated that the amount of outstanding Exchequer-bills at the present moment was 24,000,000l. An account had been called for which, when produced, would show not only the amount of Exchequer-bills issued on account of the ordinary supplies, called the ordinary supply bills, but also the amount of the deficiency-bills, and other advances made by the Bank of England. He had in his possession an account already prepared, that exhibited something of this kind; but he would not refer to it, because he was desirous of having a fuller account, and one which should be brought down to a later period, showing the advances which had been made by the Bank which were not exhibited in the account of the January quarter. The exact amount of Exchequer-bills outstanding in January, 1838, was 24,044,000l., being the lowest amount outstanding since the year 1827. In the year 1837 the amount of deficiency-bills was 18,871,000l., being the lowest amount since the year 1827. In the year 1838 the amount of deficiency-bills had naturally augmented to a sum of 22,000,000l., which, however, was much less than the amount of outstanding bills in the year 1829. He wished to call the attention of the hon. Gentleman who asked him a question on this subject in an early part of the Session to this fact, that whereas from the year 1828 to the year 1834 very large advances were continually made by the Bank upon sugar bills and other annual grants—advances amounting to 5,000,000l. in the year 1832, and to the sum of from 2,000,000l. to 3,000,000l. in other years—yet in the years 1835, 1836, 1837, and up to the 1st of January, 1838, there was not one single farthing of advance of that 1380 character either asked for or obtained by the Government from the Bank of England—and the only sum received by way of advance from the Bank in anticipation of the revenues during the present quarter was the small amount of 970,000l. He therefore felt himself at liberty to state to those Gentlemen who were connected with the Bank of England that the actions of the Bank had been left free and unfettered by the Government, and that they had no right to complain of the proceedings of the Government in any one respect as interfering in the slightest degree with the operations of the Bank. The advances obtained had been not only of the ordinary kind, but much less than the ordinary amount. He had now endeavoured to show the Committee, that although by comparing his estimate of revenue for the last year with the amount of return during the last year his estimate proved to be erroneous, yet, if they permitted him to compare the estimates for the last two years with the receipts of those two years, the result would bear out the estimates. He had endeavoured to show, also, that taking the calculations most adverse to themselves, there was a deficiency to be provided for of between only 300,090l. and 400,000l. If, however, there had been no extraordinary expenditure incurred on account of the insurrection in Canada during the last year, and if they had not had to provide for the whole interest of the West-India compensation grant, or if either one of those cases had not occurred, the result would have been a surplus of revenue instead of a deficiency. But it was not his present duty to argue either the merits or the necessity of the measures which had been adopted with respect to Canada, or the wisdom or expediency of the West-India grant. These obligations he, as Chancellor of the Exchequer, found already cast upon the country, and it was these obligations that had led to the results he had new just described. It was undeniable, that this prospect was not a satisfactory one, nor had the House or the country a right to be satisfied with the exhibition which he had made of the income and expenditure of the country. But still he was not conscious that the events which had led to an increased expenditure or to a diminution of receipts were matters which he could justly be held responsible for; nor did he believe, that it could be justly contended that they were events which could have been averted by any act 1381 of the Government, much less that they were produced by any act of the Government. But whether that were so or not, he felt every confidence that the results were but temporary in their nature; and that looking forward to the resources of this country, and to the prospects which were at this moment before them; he thought it would be absurd if any one were to say, that because there was now an exhibition of a small deficiency of 200,000l. or 300,000l., there was the slightest reason to despond of the permanent credit or resources of the country. It would be too absurd for any one to assert such apprehensions. But if any Gentlemen were really apprehensive as to the stability of public credit on account of so trifling a deficiency, there were circumstances connected with the state of the public income which might afford them some consolation, as holding out a prospect of a speedy reduction of the charges to which the country was now liable. He would briefly advert to those circumstances. The House was aware of the very large conversion of interminable into terminable annuities, which had been effected by a just and perhaps the only legitimate application that could be made of a sinking fund. The time was rapidly approaching when the country would begin to reap the fruit of that conversion. He had not the means of stating, at the present moment, the amount of life annuities; but there was no less a sum than 4,000,000l. or 5,000,000l. altogether depending upon the terminable annuities. In the course of the year 1839 the annuities for years would begin to fall in. In the interval between the years 1839 and 1841 there would fall in of terminable annuities the sum of 187,000l.; between the years 1841 and 1843 there would fall in the sum of 175,000l.; from the year 1843 to 1846 there would fall in the additional sum of 207,000l.; from 1846 to 1851 there would fall in the sum of 30,466l.; and from the year 1851 to 1860 there would fall in the sum of 575,000l. Looking at the whole of the Government annuities, therefore, terminable for years (excluding the dead weight and the long annuities), no less than 1,404,000l. in amount, would terminate by the year 1860—a period which, in the history of a nation, could not be considered remote. But before the year 1867 there would be a sum, including the dead weight and the long annuities, of no less than 3,057,000l. which would actually cease to be a charge 1382 upon the finances of this country. He had already stated that they had a prospect, and he trusted a just one, of augmenting the receipts of the revenue. The prospects of the revenue were unquestionably better now than they were a short time ago. The accounts he received were daily more promising. Hon. Gentlemen would see from the accounts published by the Bank, showing a comparison between the treasure in the hands of the Bank and the amount of its liabilities, that there had been a return to a sound state of things. The accounts which he had received from the savings' banks also exhibited the amount of the deposits received to exceed the amount of sums drawn out. On these grounds he felt no reason to apprehend danger for the future; and he did not think he was asking too much of the House, or of the public, when he proposed that they should venture to run the present risk by increasing the unfunded debt of the country to so small an extent as that which he had already mentioned. The right hon. Baronet, the Member for Pembroke, on a former occasion called the attention of the Government to the state of the money advanced in the way of loans for public works and for the building of workhouses, and adverted to advances which had been made by the Bank to the Government for that purpose. But no difficulty had arisen from these transactions, because the Government were applying the repayments received on account of former loans to the extinction of the new advances, and the fact was, that the repayments to the Government were much more considerable than the amount of the Exchequer-bills which the Government had been called upon to pay off. The Government had considerably reduced the amount of the bills issued on account of these loans, and he hoped, in the course of the present year, to be able to make additional provision for this purpose, without at all affecting his present calculations. At the commencement of this year he promised to consider the propriety of reducing the four-and-a-half per cent. duties. Indeed, he had declared his intention that a reduction should be made; but he had also stated, that he should couple that measure with the re-consideration of the sugar duties. He did not, however, think it necessary to make this subject a part of his present arrangement, but preferred reserving it for a subsequent and separate consideration. There was another topic to 1383 which he would briefly advert. He meant the claim which the South Sea Company thought it had upon the public. It was a very small sum, and not worth mentioning in connexion with his present calculations. He alluded to it, however, lest Gentlemen whose interest it concerned should consider that he had acted carelessly with regard to their claims. He now begged to thank the Committee for the attention they had shown to his statement. He knew, that he had made it extremely imperfectly, and of course the statement itself must have been very unsatisfactory; but if it were unpalatable and distasteful to the Committee to learn that there was a deficiency in the place of an excess of revenue, they might well be assured, that to the individual whose duty it was to make that statement, the fact was much more unpalatable. Besides, he had laboured under considerable personal inconvenience and suffering in the course of the evening. He made this apology because he felt it due to the Committee. He had, however, endeavoured to discharge his duty to the House and country; and he could assure the Committee, that whatever other blame might be attributed to his statement, there was one thing which ought not and could not be attributed to it;—he had not endeavoured to make the best of his case or to exaggerate it in any degree, but had endeavoured to state it accurately and according to truth; and where the subject was rather a matter of surmise and calculation than of fact, he had made his calculation rather against than in favour of himself; rather in opposition to his hope than in favour of any sanguine anticipation. If on these grounds the Committee should agree with him that it was not expedient or wise upon so small a deficiency—that deficiency arising from temporary causes—to appeal to the House for augmented taxes, he thought there was no other course left for him than to follow the precedent established by Mr. Canning in the year 1827, and to ask for a vote of credit, not, however, to the extent of millions, but to the extent of a few hundred thousand pounds; and he trusted, that the augmented resources and increased activity of the trade and manufactures of the country would enable them next year to more than wipe away the existing deficiency. The right hon. Gentleman then concluded by moving, by way of resolution, that the sum of 13,000,000l. be raised by Exchequer-bills for the service of the year 1838.
§ Mr. Hume
said, that the statement of the right hon. Gentleman had not been by any means satisfactory to him, nor would it be, he was quite confident, to the public; but, before he addressed the Committee, he begged to ask the Chancellor of the Exchequer a question, because, on the answer which he (Mr. Hume) should receive, would depend the nature and extent of the observations he should feel it his duty to make. It would be recollected that when the Committee to inquire into joint-stock banks was appointed, the Chancellor of the Exchequer engaged that an early opportunity would be afforded for entering into a discussion, how far the proceedings of the Bank of England, or the conduct of the Chancellor of the Exchequer, had tended to produce the mischief that had recently been produced in the commercial affairs of this country. He was anxious to have an opportunity of showing in what manner the public revenues had suffered, and that millions of individuals had also suffered distress for want of employment, in consequence of the recent severe shock given to public credit; and he hoped to prove clearly that that shock had arisen from mismanagement on the part of those who had the control of the monetary system of the country. If, therefore, the Chancellor of the Exchequer would now fix a day for entering upon the discussion of that question, he would, on the present occasion, confine himself to the subject of the revenue and expenditure of the country.
§ The Chancellor of the Exchequer
said, he was most anxious to discuss the whole question connected with the present condition of the law affecting the Bank of England, and the practice of the Bank under that law: but he at this moment laboured under a great difficulty, in consequence of the unavoidable absence of his excellent Friend, the Secretary for the Treasury, (Mr. F. Baring) the cause of whose absence he was sure every one must deplore. He would repeat that he was anxious that the discussion should take place, and he believed, that those Gentlemen who were connected with the Bank of England were perfectly ready to meet that discussion. (The right hon. Gentleman then turned to consult with Lord John Russell as to what day could be fixed).
§ Mr. Hume
said, he would take the first notice-day; and would give notice now ["You cannot!"]. At all events, he begged the right hon. Gentleman to understand that it was not an inquiry into the affairs of 1385 the Bank alone which he (Mr. Hume) proposed; but it was an inquiry likewise into his own conduct, as Chancellor of the Exchequer, in respect to the funded and unfunded debt of the country. His administration, as regarded money matters, was so coupled with the Bank of England that it was impossible to inquire into their conduct separately.
§ The Chancellor of the Exchequer
having searched the order-book, proposed that the motion of the hon. Member on this subject should be fixed for Thursday, the 31st of May.
§ This being assented to;
§ Mr. Hume
proceeded to state, that be could not take the favourable view which the Chancellor of the Exchequer had done as to the state of the finances of the country. The view which he took of the receipt and expenditure of the country was very different. According to the statement he then held in his hand,* the amount of revenue in the year 1835 was 50,408,579l., and in the last year (1837) it was 50,663,353l.; being 254,774l. in favour of the latter year: but, comparing the revenue of the year 1835 with the year 1836, there was a surplus in the latter year amounting to 2,540,819l., the revenue of 1836 being 52,949,398l. In the next year (1837) the revenue had been reduced to 50,663,353l., being a deficiency in that year as compared with the year 1836 of 2,286,045l., and between the actual revenue and expenditure of the year 1837, there was a deficiency of 655,760l. which deficiency was up to the end of January last; but the House would observe that the Chancellor of the Exchequer had made his statement of expenditure up to the 5th of April, by which a further sum of 800,000l. had been added to the expenditure, and thus increased that large deficiency. It appeared by the statement of the right hon. Gentleman that 681,000l. had already been paid on account of the expenses of the civil war in the Canadas; and, if he understood the right hon. Gentleman correctly, a further sum of 500,000l., remained to be provided for, which would
An Account of the Income and Expenditure of the United Kingdom for the Years ending 5th January, 1838, 1837, and 1838. Income. Expenditure. Surplus. 1836 £50,408,579 £48,787,639 £1,620,940 1837 52,949,398 50,819,306 2,130,092 Deficiency. 1838 50,663,353 51,319,114 655,760
1386 further increase the deficiency of revenue to meet the expenditure.
Expenditure. Excess of 1836 over 1835 £2,031,667 Ditto of 1837 over 1835 2,531,475
§ The Chancellor of the Exchequer
said, that the additional sum required would not be quite 500,000l.
§ Mr. Hume
at all events it appeared that the extra expense already incurred on account of Canada was more than a million sterling. If he (Mr. Hume) could believe that that would be the outside of the expense the right hon. Gentleman might be justified; but every account which he received from Canada stated, that the expenditure was most lavishly conducted, and that the amount could not yet be ascertained. The right hon. Gentleman would, therefore, be fortunate if he could clear himself at the expense only of an extra million. But what a picture was this to present to the country at this time! Owing to the misgovernment of the Colonial-office, and to not doing justice to the people of Canada, England had at once an addition to her debt to the extent of 1,000,000l., and a fair prospect of as much more before the year was out; and all hope of a reduction of taxes was, for the present at least, wholly destroyed. The people of England were thus obliged to pay those sums as a fine for the misrule and injustice of the Ministers and of Parliament which supplied them. He had already stated, the amount of revenue for the years 1835, 1836, and 1837. He found the expenditure during those years to be, in 1835, 48,787,639l., leaving a surplus of revenue over the expenditure for that year of 1,620,940l.: in 1836, the expenditure was 50,819,306l., leaving a surplus revenue of 2,130,092l. over the expenditure; while in the year 1837 the expenditure was 51,319,114l., the revenue only amounting to 50,663,353l. leaving an actual deficiency of revenue of 655,761l. to meet the expenditure of the year! The House ought to ask, how this extra expenditure in 1837 arose? It was evident that it arose chiefly from an increase in the different establishments, and partly from the increased charge on account of the slave-compensation loan. A reference to the expenditure in the year 1835, on account of that portion which included the civil list, pensions for services, salaries and allowances, diplomatic salaries and pensions, courts of justice, and miscellaneous expenditure paid from the consolidated fund, the charge for these items amounted to 2,082,817l.: in 1836, the same departments amounted to 2,866,9351l.; 1387 but then 685,325l.* of this amount was on account of the slave-compensation loan. In the year ending the 5th of January, 1838, however, there was no such extra item, and yet the expenditure on account of the same items of expenditure amounted to 2,411,457l., being an increase of nearly 400,000l. above the expenditure for 1835. Why should this increase have taken place? Why, for instance, should the expenses of the courts of justice be increased from 430,495l., the charge in 1835, to 674,452l., which was the charge in 1837? Let the Committee mark, first, the increase of the total expenditure of the country in these past three years. In 1836, the expenditure was 50,819,306l., and in 1835 only 48,787,639l.; shewing, as compared with 1835, an increase of 2,031,677l., and that the increase of expenditure in 1837, as compared with 1835, was 2,531,475l. Now all this, the Committee would observe, was an increase of actual expenditure, and he was entitled to ask, how had this arisen? It was because the establishments and consequently the expense of the army, the navy, the artillery and ordnance, had been greatly augmented, notwithstanding his objections at the time the estimates were before the House—and this in a time of peace! It was ridiculous to say, that these large establishments were in the least degree necessary in the present circumstances of the country, or of Europe. They were kept solely up to increase patronage, and to support the aristocracy. So far, therefore, from the Committee agreeing to a vote of credit now,
* An Account of the Expenditure of the United Kingdom, on account of the following items paid from the Cosnolidated Fund in the years ending 5th January, 1836, 1837 1838. For the Year 1836. 1837. 1838. Civil List 510,000 510,000 444,066 Pensions for Services 524,491 509,632 578,966 Salaries and Allowances 167,330 171,560 194,042 Diplomatic Salaries, &c. 176,015 108,301 188,141 Courts of Justice 430,495 420,996 674,452 Miscellaneous 274,486 1,056,103* 331,789 Totals £ 2,082,817 2,866,935 2,411,457
1388 they ought to oblige Ministers to make a reduction in those establishments, and then the vote of credit would be unnecessary. The present Ministers stood pledged to maintain peace and to act upon a system of economy and retrenchment; but he was sorry to say, that they had not kept the latter pledges. No circumstances had, in his opinion, occurred which warranted so large an increase in the military, naval, and ordnance departments; and the people had a right to complain of the failure of Ministers to redeem their pledges. In 1835, the charge for those military and naval establishments was 13,801,832l.; in 1837 it was 15,229,927l., making an increased charge of 1,428,095l. more in 1837 than in 1835.* Here was at once an increased charge equal and more than equal to the deficiency for which the Chancellor of the Exchequer now asked a vote of credit. He wished particularly to point out to the Committee the situation of the country this year as compared with the year ending in January, 1835. It was very easy for the Chancellor of the Exchequer to say, that expenses had been incurred which he could not avoid. But he would ask, if Parliament had voted those sums against the wish of the Ministers? Certainly not! It was true, that the charge for the slave-compensation loan had been thrown upon Government; and to that extent he was not about to complain. There had been in 1835 a surplus revenue of 1,620,940l., and in 1836 a surplus of 2,130,092l.; making a surplus of 375,032l. of revenue over expenditure; so that after deducting 665,760l., which was the amount of deficiency in 1837, there still remained a surplus revenue of 3,085,272l. in the three years 1835–1837; and yet the right hon. Gentleman now complained of a deficiency. It was, in fact, an increase of expenditure, and not a decrease of revenue in the last three years, which left the
* In this sum of £1,056,103 the following items are included, viz:— Expenses of Bank of England on the loan of £15,000,000 £7,500 Interest on Slave Compensations awarded 677,325 £685,325
1389 Treasury in its present state, He would now state what had been the addition made to the funded debt.* In 1835 the funded debt was 743,675,300l., the interest and management of this amounted to a charge of 27,783,454l. In the year ending 5th of January, 1838, the debt amounted to 762,275,189l., making an increase of 18,599,889l. in the capital of debt, whilst the charge for interest and management was 28,524,740l., making an increase in the annual charge of 741,285l., in the course of the three years more in the year 1837 than in the year 1835. He ought to state that there was a set-off against this increased charge, and a very proper set-off. The amount of outstanding Exchequer-bills on the 5th January, 1835, was 28,446,700l., on the 5th January, 1838, the amount outstanding was 24,507,450l., shewing an absolute diminution of the unfunded debt in those three years of 3,939,350l. They had, therefore, to set-off the 3,939,350l. of unfunded reduced against the eighteen millions of increase of unredeemed funded debt, which he had before stated as the increase of debt, and the finances of the country would be found, to the extent of the difference, to be in a worse condition now than they were three years ago, instead of being only in a small degree worse, as the right hon. Gentleman stated. The right hon. Gentleman himself had admitted, that the deficiency of revenue on the year ending 1st April, 1838, was as much as 1,428,000. It might be some consolation to our children, but little to us, that when the year 1860 came round there would be a large saving arising from the dropping in of the annuities; and, in the year 1867 the country would be freed from three or four millions by the same means. Although it had not been stated by the right hon.
* An Account of the Expenditure for the Army, Navy, Ordnance, and Miscellaneous Services, in the years ending 5th January, 1836, 1837, and 1838. 1836. 1837. 1838. Army 6,406,143 6,473,183 6,521,716 Navy 4,099,430 4,205,726 4,750,659 Ordnance 1,151,914 1,434,056 1,444,523 Miscellaneous Services 2,144,345 2,279,311 2,513,030 Totals £ 13,801,832 14,392,278 15,229,927 Excess of the year 1836 over 1835 £1,428,095 Excess of the year 1837 over 1838 837,649
1390 Gentleman, the whole amount of the annuities, was only 4,859,499l.; and when in 1867 or 1868 the whole of the annuities should have been got rid of, yet there would still remain an annual interest of funded debt of twenty-four or twenty-five millions of the permanent debt. He confessed, therefore, that he saw little to be pleased with in our finances, and much of gross extravagance; and he would also say of great mismanagement; and he thought that the House ought to enforce a little more economy and retrenchment.* He held in his hand also a paper from which it appeared that the country had already paid 294,199l., of increased interest on the Exchequer-bills that were outstanding on the 29th September, 1836, and that the amount due and payable up to the 1st of January was 129,724l., besides a loss of 19,309l. on the increased interest on deficiency-bills. Add to this the further sum of 92,924l. for the increased interest of 2½d. for six months from January last, on the Exchequer-bills, and it would be found that the total loss to the country was 536,166l., which had been paid or would be paid in consequence of the increase of the rate of interest on Exchequer-bills alone, since September, 1836, being almost equal to the deficiency of the public revenue in January last, And when the proper time came he would not only show, that the deficiency amounted to that sum, but that there were besides other losses by discount on the fifteen millions loan, which would make the actual amount of loss not less than 765,130l. almost entirely by mismanagement of the finances of the country. When he saw public confidence returning, and increased activity of industry in the country, he should make it clear to the House that the loss of the country was not limited to the loss of the
* (See Parliamentary Paper, No. 352, of 1838.) Aggregate Amount of increased Interest paid on Exchequer Bills £294,199 Ditto payable to 5th Jan., 1838 129,724 Ditto on Deficiency Bills, from raising the Interest 19,309 Half Year's Interest on £24,507,450 Exchequer Bills of the ½d. increase of interest 92,924 £536,166 Discount on the Loan of £15,000,000 payable to Bank 28,966 Total £765,130
* An Account of the official value of Imports, and the official and declared value of Exports of the United Kingdom in each of the years ending 5th January, 1836, 1837, and 1838.—[Finance Accounts.] Years ending 5th Jan. IMPORTS. EXPORTS Official Value. Official Value. Declared Value. 1836 £48,911,543 £91,174,456 £47,372,270 1837 57,230,968 97,621,549 53,368,572 1838 54,737,301 85,781,669 42,214,938
1391 amount of two or three millions to the Treasury; but he would show also what effects the shock given to public credit had had upon the country. He had made out a table for the present year of exports and imports similar to that made out by the right hon. Gentleman opposite, the Member for the University of Cambridge, in a former year; but as he feared this would not, in detail, meet with such a gracious reception by the House from him (Mr. Hume) as it had experienced from the right hon. Gentleman opposite, he would not trouble the House with all the particulars. He would, however, briefly refer to the summary of exports and imports during the last three years.* The value of imports, which amounted in 1835 to 48,911,543l., had increased in 1836 to 57,230,968l.; but had decreased two millions and a half in the last year to 54,737,301l.; whilst the official value of exports, which in 1835 was 91,174,456l., had risen in 1836 to 97,621,549l. and had fallen off in 1837 to 85,781,669l., being a decrease, in one year, of nearly 12,000,000l. in the value of the exports of the country. Thus, the public revenue was reduced, and the means of paying the taxation were lessened by the shock to public credit and the consequent falling-off in the trade of the country. Let the House bear in mind that it was impossible, with so great a decrease in manufactures and in the rate of wages, for the people to purchase so many articles on which the excise and customs duties were payable; and that, to this account, was to be laid the great diminution in the public revenue which had taken place. It might, perhaps, be worth giving a proof of this falling-off of exports in some of our leading manufactures.† In the leading manufacture of cotton the exports in the year ending 5th January, 1836, amounted to 44,849,038l.; in the next year they rose
Decrease in 1838 compared with 1837. £2,493,667 £11,839,880 £11,153,634
1392 to 50,646,912l.; but in the year ending 5th January last they amounted only to 41,900,110l., making a decrease, in one year, of not less than 8,746,802l. in one branch of our manufactures. The exports of hardware and cutlery in the year 1835 was 1,152,811l.; in 1836 the amount was 1,192,672l., and in 1837 it had fallen off to 773,323l., being a decrease in 1837 of 419,349l. The iron manufactures exported in the year ending January, 1835, amounted to 2,955,967l.; the amount was in 1837, 2,744,069l. being a decrease of 98,623l. Again in the linen manufactures there had been a decrease between the years 1836 and 1837 from 4,469,530l. to
Official value of some principal articles of Export from Great Britain, in the years ending 5th January, 1836, 1837, and 1838. ARTICLES. 1836. 1837. 1838. Cotton Manufactures £ 44,849,038 50,646,912 41,900,110 Hardware and Cutlery 1,152,811 1,192,672 773,323 Iron and Steel 2,955,967 2,842,792 1,744,069 Linen Manufactures 4,285,385 4,469,530 3,213,345 Woollen do 7,399,657 7,535,064 4,680,247 Silk do 792,087 767,986 432,123 † See Table in following column.
1393 3,213,345l., being an actual decrease in the year ending on the 5th of January last of 1,255,185l. In the woollen manufactures the exports in the year ending 5th January, 1836, were 7,399,657l.; in 1837 they were 7,535,064l, but they had fallen in the year ending 5th January, 1838, to 1,680,247l.; showing a decrease of 2,854,817l. With regard to silk manufactures, the exports in the year up to January, 1836, amounted to 792,087l., and in the year up to January, 1837, to 767,987l., and in January, 1838, they had fallen to 432,123l. being a diminution of nearly one half, or 335,863l.; making an actual decrease in the year 1837 of upwards of 13,700,639l., or very nearly fourteen millions, in round numbers on these six articles alone. In the linen Manufacture, this extraordinary decrease was to be attributed to the state of affairs in America. He was sure that the House would agree with him in thinking that it was most important to this country to maintain a good understanding with America; and that it depended in a great degree on the state of trade in America and the firmness of the money market there, whether the shock given to public credit in this country would be quickly recovered. He found that the number of yards of linen manufactures* exported from the United Kingdom in 1835, was 77,977,089, whilst it in 1836 had increased to 82,088,760 yards, but had fallen in 1837 to 58,426,333 yards, being a decrease in 1837, as compared with 1836, of 23,652,427 yards. It appeared that, notwithstanding this decrease on the aggregate of our exports, our linen trade had increased with France, for he found that in the year 1835 we exported to France 1,247,901 yards of linen; in 1836, nearly two millions, or 1,998,158 yards; and in 1837 we exported no less than 3,368,388 yards, the trade being more than doubled in three years. Nor was this all. The total number of pounds of linen yarn exported to France was
Comparison of the Amounts of Funded and Unfunded Debt, and of the Annual Charge for Interest and Management of the same for the years ending on the 5th January, 1835, and on 5th January, 1838. FOR THE UNITED KINGDOM. Funded Debt Unredeemed. Charge Interest. Annuities and Management. Total Charge, Interest, and Management. Exchequer Bills out on 5th January Total Debt on 5th January, 1835. Great Britain and Ireland. £711,740,265 £22,462,749 £4,185,084 £26,647,833 £28,446,700(b) 31,935,035 1,128,724 6,897 1,135,621 £743,675,300 £23,591,473 £4,191,981 £27,783,454 Total Debt on 5th January, 1838. Great Britain and Ireland. £728,857,903 £22,988,322 £4,852,676 £27,840,998 £24,507,450 33,417,286 1,176,919 6,823 1,183,742 (a) £762,275,189 £24,165,241 £4,859,499 £28,524,740 Increase £18,599,889 £573,768 £667,518 £741,285 Less £3,939,350 (a) Finance Accounts Annual. (b) P. P. 352 of 1838.
1394 2,384,678lbs. in 1835, 4,012,141lbs. in 1836, and as much as 7,010,983lbs. last year. To America, however, our exports in the same staple article had greatly decreased. The total number of yards of linen manufactures exported in 1836 to that country was 39,937,620, but the quantity had fallen in 1837 to 13,495,453. It was evident, therefore, that a severe shock had been given to our manufacturing industry by the derangement of the currency, and he was anxious to prevent a recurrence of the difficulties of 1836–7: he was perfectly satisfied from a careful consideration of all the documents in his possession, that those commercial difficulties might have been, in a great measure, prevented. There was also one subject to which he wished to make an allusion, and as a day was fixed for a full discussion upon them he would not then do more. He referred to the savings' banks; and he wished merely to assure hon. Gentlemen in that House, and to assure the country, that he was not anxious to shake in any manner the public confidence in those establishments, but he was desirous of placing them on a firmer and more durable footing than they were at present, without any loss to the public, and he trusted that the resolutions which he would propose to the House would fully explain their present state and the alterations which he had to propose. He would again ask hon. Gentlemen whether they were quite satisfied with the situation of the finances of the country, and whether they ought not to go further than the right hon. Gentleman contemplated by his vote to guard against the risks under which the country had been placed, and might be again placed? It was an extremely painful duty for him to bring the House to review the difficulties in which the country had been placed in the years 1836 and 1837; but he considered it necessary to do so as it was wholly a miracle that the right hon. Gentleman had escaped from his critical situation so well. But when it was known that there were ninety millions of floating debt due by the Bank of England, and by the Treasury in 1836–7, and that there had only been four millions of bullion in the Bank of England at that time, it was only wonderful that the country had not got into still greater difficulties. In October 1836, when there was only about five millions of bullion in the Bank, there were Bank notes of the Bank of England in circulation and deposits exceeding 1395 thirty-two millions; of joint-stock and private banks, twelve millions; of Exchequer-bills out, about twenty-nine millions; of savings-banks' capital, nineteen millions; making an aggregate of ninety-two millions of paper payable in cash, all in demand except the Exchequer-bills. Was that a state of things for this great commercial country to be in? And this exclusive of four or five millions of deficiency-bills borrowed every quarter from the Bank to pay the interest of the debt. He was prepared to show that since 1820 there had always been a large issue of deficiency-bills to pay the dividends of the public debt, and what he wanted was the right hon. Gentleman so to regulate the public affairs as not to depend on the aid of deficiency-bills from the Bank, for quarterly advances. Was it not a disgrace that a great country like England should not in any one quarter be able to pay its dividends without going to the Bank to borrow four millions or five and a half millions—in the last quarter it was 5,220,000l.? He called upon the right hon. Gentleman to look to the difficulties which the country might have to meet by the mistakes of that establishment. Why should he go to the Bank to be a constant borrower? He would ask the right hon. Gentleman why he did not by a loan provide the means to place a deposit in the Bank sufficient to pay the dividends? Many Members might not know what was meant by the term—deficiency-bills." They were bills issued to the Bank to enable it to meet the quarterly deficiency in the consolidated fund in order to pay the dividends, such bills being repaid out of the growing produce of the taxes when received—hon. Members would see, that thus the country was obliged to borrow, like a spendthrift, every quarter in anticipation of our income, and this at a time when the Bank might be without a shilling or a sovereign. What he required, therefore, to place the public finances in safety, was, that Government should not be obliged to go to the Bank at all to borrow money for the purpose of paying the dividends, nor for any other purpose without the sanction and knowledge of Parliament. Such a state of things ought not to exist. He would not now say more of the evils arising from the issue of so large an amount of Exchequer-bills, but, on a more fit opportunity he would enter fully into them; at present he would close his observations by entreating the right hon. Gentleman to look well 1396 at the situation in which he was placing the country by being dependent upon the Bank for the means of paying the dividends, and by keeping up an expenditure larger than the revenue. In October, 1836, there were little more than four millions of bullion, including gold and silver, in the Bank, and that was not the state on any one day, but on the quarterly balance; and when the Chancellor of the Exchequer recollected the situation in which the public credit was at that time, he (Mr. Hume) was sure that the right hon. Gentleman had not reposed on a bed of roses. A t that time, as already stated, the circulation of the Bank was 32,000,000l., or rather, including circulation and deposits, it was 32,265,000l.; and, including the joint stock and private bank notes and Exchequer-bills, there were 73,285,600l. in paper out, to meet which there were but four millions of bullion in the Bank; and, in addition to this, the deposits in the savings' banks amounted to eighteen or nine-teen millions, which might have been called up at any time; so that if the panic had continued a short time longer, and had increased to what it was in 1825, the Bank and the Government would have been placed in a situation in which he would be sorry to see a government or a banking establishment at any time. They would have been bankrupt. The right hon. Gentleman was going on a system of from hand to mouth, and there was nothing permanent or safe in the state of the finances of the country; each Chancellor of the Exchequer seemed to rest satisfied if he could pass through his own time, regardless of the loss be occasioned to the public revenue, and indifferent as to the risk he might run, or the dangers to his successors. He (Mr. Hume) thought, that the House ought not to be satisfied to meet the deficiency in the revenue by adopting the plan proposed by the right hon. Gentleman of a vote of credit. The right hon. Gentleman had, indeed, shown the difference which had taken place in the revenue and expenditure, between the last and the preceding year, but he had omitted to show the reduction of two millions in the amount of money in the Exchequer, so that there was an actual decreased means to that extent. He, therefore, again confidently stated, that the finances of the country were not in such a condition as that the House should favourably receive the proposal of the right hon. Gentleman. He (Mr. Hume) called upon him 1397 to reduce the expenditure of the army, the navy, and the ordnance, which had been increased 1,400,000l. and upwards, since the year 1835; and whenever the time came to move the vote, to provide for the deficiency, he should oppose it, and would certainly take the sense of the House against it. The right hon. Gentleman had told the House that there were only two ways of meeting the deficiency—first, if it were permanent, by an increase of the funded debt, and, if it were only temporary, then by an advance upon the credit of Exchequer-bills. Whilst he (Mr. Hume) thought that, as there had been a great excess of expenditure during the last three years over what had previously been, and more than was absolutely necessary, it behoved the House not to add to the public debt, in either of the ways suggested by the Chancellor of the Exchequer, but to reduce the expenditure of the country, and thus to provide the means which the right hon. Gentleman required of keeping the expenditure within the income. For himself he would entreat the House to oppose the increase of the debt in every way, and compel the Government to pursue that course of economy and retrenchment to which they were pledged; but to which pledge they had not for the last three years attended.
* Quantity and declared Value of Linen and Linen Manufactures exported from the United Kingdom in 1835, 1836, and 1837. Years. Linen Manufactures. Tape Threads. Linen Yarn. Yards. £ £ Yards. £ 1835 77,977,089 2,893,139 99,004 2,611,215 216,635 1836 82,088,760 3,238,031 88,294 4,574,504 318,772 1837 58,426,333 2,033,425 64,020 8,373,100 479,307
Mr. W. Williams
said, that although the hon. Gentleman who had resumed his seat, had not entered fully into the subject of Exchequer-bills, he (Mr. Williams) would show, that a large sum of money might have been, and ought to have been saved by a reduction in the rate of interest which they bore. When the right hon. Gentleman, the Chancellor of the Exchequer, a few nights since, at a very late hour, moved a vote of 24,000,000l. to cover the Exchequer-bills out, he had asked at what rate of interest they were to be issued? and was astonished to hear in reply, that they were to bear interest at two pence per day, or at the annual rate of 3l. 0s. 10d. per cent. And the right hon. Gentleman had imputed rashness to him in the statement which he had then made, as to the rate at which money could be borrowed. He had not stated, that money was not worth more than two per cent. for any period; but what he had stated was, that it was not worth more than two and a half per cent. on ordinary securities, and that it might be borrowed, for a short term, at two per cent. Since that night, he had been 1398 informed by persons well versed in mercantile affairs, that any sum might be raised on ordinary security, at two and a half per cent., and that it might be procured at two per cent. for short periods, almost to any amount. He had then expressed, as he did now express, surprise that the public credit of the country should be in a lower state than that of ordinary individuals, and especially that it should be lower than the credit of the East-India Company; but he found that such was not the fact; for if they looked at the price of Exchequer-bills, bearing only three per cent. interest, it would be found that the premium upon them amounted to three and a half per cent., or more than the whole twelve months' interest. If, however, he had not expressed it before, he had expected that the right hon. Gentleman would have now stated his regret at the advance in the rate of interest, and he (Mr. Williams) was sorry that the right hon. Gentleman had not so done. The right hon. Gentleman's arithmetic also differed from his, for the right hon. Gentleman had stated the loss to the country between the interest of 1½d. and 2½d. per day to have amounted only to 396,000l., whereas, according to his (Mr. Williams's) arithmetic, the loss was as much as 547,000l. The calculation was easy, the time was for six quarters, the amount twenty-four millions and upwards. Perhaps the right hon. Gentleman would look at his figures again, and settle the difference; but he (Mr. Williams) stated again, that the advance of the rate of interest on Exchequer-bills, made on the 21st of November, 1836, had made a difference to the country of not less than 547,000l. The rate of interest had been raised in 1825, but what was the state of the country when the right hon. Gentleman opposite raised the rate of interest from 1½f. to 2d. a day? The rise in 1825 was ordered on the 19th of December, 1825, at the very commencement of the panic? but Exchequer-bills, in less than a fortnight from that time, were at a discount of eighty-five: the premium was by no means increased. But Exchequer-bills in 1836 had not decreased in value to a discount before the right hon. Gentleman had increased the rate of interest on them to 2d., and afterwards to 2½d. The question, however, was, at what rate of interest could the Chancellor 1399 of the Exchequer now raise the necessary money on Exchequer-bills? For six years the rate of interest had been only two and a quarter per cent., and yet the right hon. Gentleman had advanced it to three and three-quarters per cent. He said that there was no necessity for that advance, for if the right hon. Gentleman had only proposed a large funding of Exchequer bills, he would have prevented all inconvenience; and even without this they never bore a rate of premium so low as at any time to make it answer the purpose of any party to pay them in for taxes—No interest was allowed on the time unexpired after they were paid in; they never came down so low as to make it worth any one's while to pay them in; but suppose they had fallen so low, even then a proposal for funding them would have prevented the necessity of raising the rate of interest. The Exchequer-bills bearing an interest of 2d a day were now at a premium which amounted to three and a half per cent., or more than one-half per cent. more than the whole interest upon them. And yet the right hon. Gentleman said, that he could not borrow the money upon the same terms as it had been borrowed during the last six years. Why, there never had been a period when money was so abundant, so easily raised, and so plentiful as at the present time. This was not only shown by the rate of premium on the Exchequer bills, but the East-India Bonds which only bore an interest of three pounds per cent. were at a premium of upwards of 80s. so that people were actually offering a year and a quarter's interest for the purpose of getting possession of bonds bearing an interest of three per cent. He believed there was not an individual in the country acquainted with the money market would agree in the opinion of the propriety of the course pursued by the right hon. Gentleman. The right hon. Gentleman had asked him (Mr. Williams) what proof there was that the money could be borrowed at so cheap a rate, when the consols were only at a little more than three per cent.? He was astonished that any Gentleman should have asked such a question, and still more astonished was he that such a question should have proceeded from the Chancellor of the Exchequer. Did not the right hon. Gentleman know the difference between an Exchequer-bill, which was paid in full under any circumstances, and consols, which, though now 1400 at ninety-four, might fall any day and occasion a great loss. In 1825 they were at ninety-four and a half, but they came down quickly to seventy seven and a half, so that a person buying in at the highest time, and selling out at the lowest, would have suffered a loss of nearly twenty per cent. And this was why Exchequer-bills might always bear a lower rate of interest, because there was no risk, and the principal was sure always to be paid in full. If they looked at the rate of interest on Exchequer-bills for a course of ten years, except during a short interval, it had only been two and a quarter per cent.; and although the interest in time funds might have been three and a quarter per cent., yet one security was at least as valuable as the other. Now the interest on the Exchequer-bills was nearly equal to that on the consols, and he would ask whether with reference to the state of the finances of the country, this was proper? During the last fifteen months the right hon. Gentleman had given one-half per cent. more interest on Exchequer-bills than he need have given in the funds; and if the country was losing by the unfunded debt, why did he not fund it? There never could be a better time. Now, however, he was suffering a loss of the public money; and if he would only issue advertisements for tenders for Exchequer-bills at 1½d. interest, he (Mr. Williams) was sure that the tenders would be soon made to as large an amount as the right hon. Gentleman might require. Why, then, should the public lose so large an amount by the high rate of interest? He could see no reason for the advance which had taken place except that there might be a connection between the Treasury and the Bank. The Bank was in distress—it wanted to dispose of a large amount of Exchequer-bills, and to prevent loss by the sale, the right hon. Gentleman came forward and advanced the interest. The consequence was that in a short time the premium rose to 30s.—as much as the advance which had been made, a sure proof that the money was thrown away. The other evening he had stated that the cause of the great pressure on the money market in 1836 and 1837 was produced by the transactions between the Treasury and the Bank relating to the West-India loans. The right hon. Gentleman had challenged him to prove the fact. He was now ready to prove it, but as his hon. Friend (Mr. Hume) was to bring the 1401 question before the House, he would not then enter into it. He hoped, however, that the House would not sanction such a waste of the public money, and he called upon them, as the representatives of the people, to do their duty in that House, and to interpose between the country and the right hon. Gentleman the Chancellor of the Exchequer. If any Gentleman well versed in commercial affairs would state in the House that the money could not be raised at the lower rate of interest, he (Mr. Williams) would admit that he was in error. He was sure, however, that no one would make such a statement; and, therefore, he hoped that the House would not permit a greater expenditure of the public funds by the Government than was absolutely necessary, or there would appear to be required to be laid out in the case of any ordinary individual. Too much power had already been placed in the hands of the Treasury, and he was really of opinion that a question of such importance as that to which he was now referring, ought not to be left to the sole discretion of the Treasury Board; but he must express his belief, that the reference of the question to a Committee of this House was necessary for the purpose of securing the public from unnecessary and wasteful expenditure. Such was the course pursued by the chamber of deputies in Paris at every session, and he was convinced, that the adoption of a similar proceeding would be attended with the greatest benefit. So certain, indeed, was he of this, that he should feel it to be his duty at an early part of the next session of Parliament to move, that such a Committee should be appointed, in order that they might exercise a control over the cash transactions of the Treasury, and in order that they might investigate the expenditure of the public money under the Appropriation Act. In conclusion, he must again express a hope, that the House would interpose its authority between the right hon. the Chancellor of the Exchequer, and the people to prevent a waste of the public money, and he must repeat his conviction, that such an effect might be produced by the adoption of a suggestion which he had already thrown out for the reduction of the rate of interest from 2d. to 1½d.
§ Mr. Goulburn
said, that it was not his intention to make many observations on this subject, which was so important to the interests of the country; but, never- 1402 theless, as this was one of the few occasions on which an opportunity was afforded to Members of that House to express their opinions on the state of the finances, he felt himself called on to say a few words in reference to it. He must say, that the very short address which he proposed to make to the House would be very much decreased in length by what had fallen from the hon. Gentleman who had just sat down, because, in respect of much that he had said in reference to the funded property of the country, he entirely concurred. At the same time, however, that he made this admission, he could not concur in the observation of that hon. Gentleman, that any control ought to be exercised by a Committee of the House in the manner suggested by him over the financial transactions of the Treasury. The view taken by the hon. Gentleman, was not certainly one in which he coincided, because he felt that it was due from those who took an interest in the matter, to call the attention of the House to it; and this course was not only called for at the hands of those officers in whose care the finances of the country were placed, but also by that respect to which the House was entitled. He must say, also, that he certainly did not agree with the hon. Gentleman, the Member for Kilkenny, in the statement which he had this evening again repeated with respect to the real causes of the embarrassment of the country. The exertions made by the hon. Gentleman, were always most laudable, but he must disagree with him in the rule which he had endeavoured to impress on the House, that the only real means of conducting the affairs of the country, was to continue in obtaining the greatest possible reduction in the expenditure of the Government. Now, it was doubtless always expedient and necessary to make such reductions as were compatible with the state of the country, and with economy; but his object had always been to impress on the House, what appeared to have been forgotten by the hon. Gentleman, that real economy did not consist in a niggardly reduction of the official establishment, so much as in the careful husbanding of the means of the country; and that although there was the greatest expediency in endeavouring to procure a reduction of the debt which pressed so heavily on industry; yet the course which was the most advisable to be pursued, was 1403 such as should be best calculated to keep the resources of the country in a state of elasticity, so that they might speedily recover the effect of any sudden shock which they might sustain. The truth of this argument was espressly affirmed by the statement made by the right hon. Gentleman, the Chancellor of the Exchequer. For what said he? He said, that there had been an expense of one million incurred, in order that the necessary means might be afforded for putting down the insurrection in Canada. He would only ask any hon. Member who had at all looked into the transactions accompanying that revolt, into the effects and circumstances attending which it was not necessary for him to go, whether the great proportion of this expenditure might not have been saved if there had been a limited augmentation of the establishment, by which the continuance of the existing tranquillity of the country might have been secured—an augmentation which might have been supported at the comparatively trifling cost of 20,000l. or 30,000l.,—and whether, therefore, instead of the extravagant outlay alluded to by the hon. Member, a positive saving would not have been effected. He would not, however, pursue this part of the subject any further, because it would more properly come under discussion, when the vote which was hereafter to be proposed, should come under consideration, for he was firmly of opinion, that such matters best met with the attention of the House in moments of calm and temperate inquiry, rather than at times when the debate was of an opposite character. He was anxious to impress on the House, however, that real economy consisted in keeping the public debt in such a state as that it was capable of being easily managed, and he had to complain that under the administration of the financial affairs of this country of the right hon. Gentleman opposite, there was far from having been any reduction of that debt, but that, on the contrary, the alteration which had taken place in it was an increase in its amount; and he was prepared to say, that the augmentation was such as to have led to the difficulties in which the right hon. Gentleman found himself placed, and which, if a due degree of watchful care were not taken, might eventually lead to consequences to the country of a most alarming nature. With respect to the public debt, if its 1404 present total amount were compared to its amount in the year 1831 and the year 1836, it would be found that there had been an augmentation of the capital or funded debt; and if the total charges of the debt at the same periods were compared, a similar result would be discovered. This was the case at the time of peace and of plenty, and of unusual and boasted prosperity; and this, too, when there were no evils of a commercial nature to be complained of, and when, therefore, if at any time, one would have imagined that the debt could have been reduced. It was not of this alone, however, that he had to complain, but he complained on another ground. The House would remember, the hon. Member for Kilkenny he was sure would remember, that in 1828, the principles on which the sinking fund was supported were described by the hon. Member to be a fallacy, and was declared by the House to be of an objectionable nature. In order to keep up that fund while specific sums were applied to the reduction of the public debt, another debt was created at the same time, equal and sometimes even greater than the amount paid off. In 1828 it was declared by Parliament that this system should cease; and in 1829 it was laid down as a rule for the conduct of those who should afterwards have the government of the financial affairs of the country that the surplus of the public funds should be clearly and positively stated every year; and that no debt should be incurred merely for the purpose of paying off debt in order that the public and the country might really know what was the amount of the surplus in the hands of the Government. Now, under the operation of this law, during the period that the right hon. Gentleman had been in office, he had been guilty of a violation of its principles, and had produced to the public a false account—he did not mean false as conveying any imputation on the right hon. Gentleman, but an erroneous account of what had been the surplus, and an equally erroneous account as to what was applicable to the payment of any deficiency which might appear. Under the bill of 1829 it was declared that whatever real surplus might arise after the expenditure was defrayed should be applied to the reduction of the debt, and provision was made that it might be applied to the reduction of the amount of Exchequer bills, or in the 1405 absence of them to the purchase of deficiency-bills. He did not object to this latter course, because occasions might arise when the greatest and most important interests of the country might depend on the necessity of so applying part of the funds, and it was the intention of Parliament that they should be so applied; but yet it was found that during the last three years what had been stated as the surplus revenue had been applied to the reduction of deficiency-bills. The hon. Member for Kilkenny had already said, that there were perhaps some Members in the House who were not acquainted with the exact character of deficiency-bills, and he would just explain to the House the effect of applying the public funds to meet them. It was known that the Government were bound on each quarter-day to provide the amount necessary for the payment of the dividends on the consolidated fund. The course formerly adopted was, that the revenue was permitted to accumulate during the whole quarter in the hands of the Bank until quarter-day, when it was required to be paid. This, it was found, was attended with loss, and therefore it was determined to apply the public money as it came in to general purposes, without allowing it to accumulate, and at the quarter the deficiency-bills were issued, when the required amount of money was not at the Bank, for the security for the payment of the debt necessarily incurred with the Bank for the payment of the funds advanced, and it was proposed that these bills should be paid during the ensuing quarter. If, therefore, it was stated that there was a surplus revenue of a million, and the public were led to believe that it was an actual surplus, and if five, six, or seven hundred thousand pounds were applied to the payment of these bills on the one hand, or of the public debt on the other, what was it but the very fault intended to be remedied and prevented by Parliament in the act of 1829, and did not the Government lead the public to entertain erroneous views in reference to the revenue? Yet this was the practice adopted, and it was against this that he most strenuously protested. With regard to the unfunded debt, he might almost repeat what he had said before; and he must say, that it was a subject which had been the source of considerable anxiety and attention. The hon. Member opposite had stated in his speech that the 1406 amount of Exchequer-bills was very considerably reduced, the reduction being four millions; and he had stated, that the extent of the issue of them did not exceed that of 1827, and he therefore inferred that the amount was not greater than was required by the state of the market. This evidence would be conclusive if it had not been met by other parts of the statement of the same hon. Member; but these, as well as the observations of the hon. Member for Coventry, whose authority and experience on the subject every one must respect, completely overset his inferences. The right hon. Gentleman himself, however, in endeavouring to maintain that the amount was not greater than was required, said, that the public prosperity was concerned, and that if he did not maintain the interest at more than the rate of three percent., the persons who otherwise would be disposed to purchase Exchequer-bills would be induced to embark in those wild speculations at present going abroad, and would probably so far involve themselves as materially to suffer by their adopting such a course. But this was altogether fallacious; and, if it were not, was that the principle on which the Government should proceed? It was fallacious, because the right hon. Gentleman imagined that the public and the individual who was the purchaser of the bills received the interest paid by Government. But it was not the fact, that if the Government paid three per cent. on Exchequer-bills, these parties would receive it; for there would be found plenty of persons who were willing to take them at 72s.; and the principle, therefore, was to reduce the interest to the rate paid in the market, so that if it were proposed to raise money on Exchequer-bills at five per cent. it would have no effect, for the public would pay the full percentage, while the individual who bought the bills would make no more than by any ordinary speculation. The argument, therefore, was a fallacy, for the payment of Exchequer-bills did not depend on the amount of interest paid, but on the state of the money market. If, however, it were true, as was stated by the right hon. Gentleman, in what situation did the admission place the Government? No dependence was to be placed on all those ordinary means by which the Government had hitherto been in the habit of raising money. No attempt was to be made by the Government to avail itself of the addi- 1407 tional security which its name would afford, nor was it to avail itself of the high credit which it had invariably supported by its uniform good faith; but they were to go to market precisely on the same footing as if they were speculators without any such means as those he had suggested to support them. This was a plan which must soon utterly fail and break down, attended as it was with the greatest difficulties and inconveniences, and calculated as it was to involve the Government in principles which were altogether false. But the right hon. Gentleman said, that he must keep Exchequer-bills to meet the demand; and this he was prepared to admit; but, at the same time, the right hon. Gentleman must do so, taking due care that the amount should not exceed the demand, and in considering this, he must look not at the numerical amount of Exchequer-bills alone, but at all the other circumstances of the country, and he must take care not to add to the natural difficulties which the system must create, if it should not be kept within proper bounds. He was prepared to contend, that if the right hon. Gentleman had attended to the reduction of the unfunded debt, he would not have been in the position of being obliged to raise the rate of interest; but, at the same time, situated as the right hon. Gentleman found himself, he had no hesitation in admitting that he was right in the step he took in that respect. It was true, that the Exchequer-bills were not now higher than they were in 1827, but were the public now in the same situation as then? They must consider the Exchequer-bills as payable on the demand of the party holding them, and they must recollect, too, that the Government had not only the difficulty of being compelled to provide for the payment of them at ordinary times, but also that they could not when any sudden call was likely to be made, avail themselves of the issue of an additional 500,000l. or 1,100,000l. to meet the casual want. It was not then the numerical amount which was to be considered, but all the other circumstances which might tend to increase the danger in case of any sudden emergency; and he would tell the right hon. Gentleman that there had been a great alteration in the circumstances of the country in this respect. In 1827, when Mr. Canning had only twenty-four millions of Exchequer-bills, and proposed to raise three millions more, what was the 1408 amount of deposits in savings' banks? There were no deposits. What was it now. Twenty millions; so that if there should be any sudden want—if there should be a bad harvest, with which, thank God, this country had not been afflicted for some years, but which, nevertheless, might occur sooner than was expected—or if there should be any other cause by which the people would be compelled to fall back on their own resources, how were their demands to be supplied if there should be a sudden call for their deposits, such as had been made in France some time ago? Government would not only have to meet these demands, but they would have to meet them under the additional difficulty of their having no funds at their disposal but stock, which they would be compelled to sell at sixty or seventy, having purchased it at ninety three or ninety-four. He was not calling on the House to reduce the amount of interest paid, but he was simply doing all he could to put the case to the House of the poor being compelled to rest on their own resources, and of all adventitious aid being withdrawn from the Government, and their being left to meet the demand which would be made upon them, and which they would have to meet from their own resources; but he said that the House was bound to protect the country against the risk which would be run, and from the danger to which the public would be exposed in the event of the present system being allowed to continue. He had already said more than he had intended, and he regretted having so long occupied the attention of the House; but he was really anxious to point out to the House the apprehensions which he felt, because at the moment of calamity or difficulty it was impossible to reflect on the dangers which might be produced by the continuance of a system so bad in its details, while it was easy to make provisions for the future when the evils which might follow were foreseen; and when he made this statement to the House, he did so, declaring that he would take an early opportunity of submitting to the consideration of the House the real state of the debt of the country, and he sincerely trusted that some measure might be adopted by which, in case of difficulty, whether it arose in consequence of a bad harvest, or of a foreign war, or a revolt in the colonies, or any of those other calamities the nature of 1409 which prevented their being anticipated, the resources of this mighty empire might be immediately applied without difficulty, and without producing any of those concussions or disturbances which were so much to be regretted.
Mr. M. Attwood
was understood to admit, that it was right to raise the interest of Exchequer-bills, but that ought not at any time to be done from any sudden fluctuation in the money market. The rate of the interest of Exchequer-bills ought to be regulated by the general rate of interest in the money market, but Government ought not to alter the rate of interest until the money market was in a settled state. He contended, that the calculations of the Chancellor of the Exchequer as to the probable amount of the revenues of the years 1835, 1836, and 1837, were incorrect; but the right hon. Gentleman now balanced the surplus of one year against the deficiency of the other, and in that way he claimed credit to himself as being a true prophet as to the income of all those years. The right hon. Gentleman now found, that he had a deficient revenue, but would he put on a new tax to supply the deficiency. If the right hon. Gentleman did attempt to impose a new tax, he could tell him that his tenure of office would be very short. In what way, then, could his deficiency be supplied? The Government could not reduce any of the departments of public expenditure. These they had brought too low already for the service which the country required. What, then, must they do? They must borrow; and if they borrowed in the only way that was fairly open to them—that was from the Bank—they must depreciate the currency, for in proportion as they borrowed must they depreciate the currency in which they borrowed.
§ Mr. Gillon
felt that the debate had been carried on on too narrow a basis, as the discussion had almost entirely been confined to the rate of interest on Exchequer-bills; but there were many other grave topics which, on taking a review of the financial state of the year, it was necessary to regard with attention. He trusted, that those disasters which the hon. Member for Whitehaven said would befal the country would be found to be fallacies, and that those anticipations which the right hon. the Chancellor of the Exchequer had expressed with regard to the 1410 future prospects of the revenue would be realised; and he had heard the grounds which the right hon. Gentleman had given for such inferences with great satisfaction. He thought that in the present circumstance of a defalcation in the revenue it was necessary that the Chancellor of the Exchequer should pay the greatest attention to the financial circumstances of the country. He had heard with regret that there was to be no reduction in the taxes of the country; but he was convinced that by changing the mode of levying many of the taxes a considerable increase of revenue would be obtained, and then great relief would be afforded to the country. This was particularly the case in the Excise department, where from 600,000l. to 700,000l. a-year might at once be obtained by adopting the suggestions of the Commissioners of Revenue Inquiry. He was convinced, that by reducing the soap duties one-half they would get more than the present amount of revenue, and at the same time considerable relief would be afforded to the public and the manufacturer, and it would put down the illicit manufacture. Again, in the Customs, by altering the duties on timber, more than 1,000,000l. a-year might be brought into the Treasury, and in addition to this commerce would be benefitted, and the public would be gainers by obtaining a better article than at present, at a cheaper rate. The greatest advantages would also be bestowed on the commercial and manufacturing interests of the country by getting rid of the Corn-laws, and this might be managed in a way so as to be highly productive to the revenue.
§ Mr. Hutt
could not let the present discussion close without making a few observations, as he felt a deep interest in one or two matters that had been adverted to. The Chancellor of the Exchequer had informed the House that the country had no surplus revenue, and that he therefore could propose no reduction of taxation. This, he was sure, was a statement which could not be satisfactory to the country, but it was a matter of necessity which there was no resisting; it was one of those vicissitudes to which a commercial country was exposed, and which was not chargeable on either the Government or the Legislature. He could not help feeling, however, that some degree of censure was justly due to the Government and the Legislature, for there had been an evident 1411 indisposition on the part of both to inquire into those causes which had so often paralysed the commercial transactions of the country. When his hon. Friend, the Member for the Tower Hamlets, moved for an inquiry into the joint-stock banks, the right hon. Gentleman, as well as the leading Members on both sides of the House, resisted the motion to inquire into the proceedings of the Bank of England as regarded their mode of dealing with the circulating medium. It was the opinion of Mr. Thomas Tooke, and other enlightened men, that the power which the Bank of England had of expanding or contracting the revenue of the country was one of the main causes of the crises it had experienced. This was a matter of great importance, and required the most serious consideration; and it was one that the Chancellor of the Exchequer ought never to lose sight of. He did not believe that Gentlemen opposite were satisfied that the monetary system of the country was in a sound state. This was evident from the effects that the proceedings of General Jackson in the United States had had on our financial proceedings; for it caused such a run on the Bank of England that it reduced the amount of the precious metals in its coffers to about four millions; and if the run had gone on but a short time longer it would have caused a panic, and no doubt would have led to a commercial crisis, attendant with all its evil consequences. On this subject Mr. Tooke made some pointed observations, and dwelt upon the injudicious proceedings of the Bank of England. Looking to the speculative character of the country at the present moment, he asked, whether it were not one which should be regarded with great alarm? He therefore entreated the Chancellor of the Exchequer narrowly to watch the proceedings of the Bank.
§ Colonel Sibthorp
said, that during his experience in Parliament he never saw a Chancellor of the Exchequer in so woful a plight. After they had heard so much of former Administrations—after they had been told of the retrenchment and reform which the present Ministry intended to introduce—and the good it was to produce—after all this the Chancellor of the Exchequer declared that there was a deficiency of two millions. Now, bad as that was, it was better than he expected. If all their debts had been paid—all the expenses of Commissioners and the other 1412 demands upon them—it would amount not to two millions, but to four millions. He had a motion for the 31st of May for inquiry into this subject, and he hoped to open the eyes of the House and the country to these most (politically) infamous proceedings. They had been told of former Administrations—they had been told of Mr. Canning, a Gentleman of whom he should say that he filled his situation on the Treasury Bench better, far better, than any hon. Gentleman who now enjoyed a seat there—but what had former Administrations to do with the subject before them? What had Mr. Canning to do with it? They might as well have gone back to the days of Noah as to those of Mr. Canning. He never saw before, a Chancellor of the Exchequer come down to the House upon a similar occasion with so pallid a countenance. He never before saw a such despair pictured in the face of an hon. Gentleman filling that important situation as upon this occasion. It was time to look to this state of things. If the hon. Member for Kilkenny would, as he called it, take the bull by the horns, and pursue his motion for inquiring into the Bank of England, he should be exceedingly pleased. The governor or deputy-governor of the Bank of England was not infallible, and there was no doubt that some errors had been committed in that establishment. With respect to the reduction of duties he could only say, that be deeply regretted that the right hon. Gentleman, the Chancellor of the Exchequer, had not thought proper to acquiesce in his proposition, to lessen the duty upon fire insurance; it was a most important subject, and a reduction of that kind would be productive of the greatest public benefit. It was a most dangerous course to attempt to mislead the public with respect to the revenue. The Chancellor of the Exchequer should have come forward manfully, fearlessly, and candidly, and have told the public the dangerous state of the revenue. He could not give much credit to their statements. He had no confidence in the Ministers of the Crown, and least of all in the Chancellor of the Exchequer. They were unable to manage the public affairs, and they ought to tell the people so. The very best thing they could do would be to walk out of the House, and let the people be done with them.
§ The Chancellor of the Exchequer
was 1413 conscious that that statement could not prove satisfactory to them; but of the observations which it called forth he had no complaint to make, on the contrary he felt obliged for the manner in which what he had said had been received. It was therefore only necessary that he should then very briefly allude to a few of the topics which had been noticed in the course of the evening, but in doing this he should limit himself as much as possible to that which was barely necessary. He wished in the first place to correct an error into which the hon. Member for Coventry had fallen, who had represented him as saying, that the expenses for six quarters on Exchequer-bills was 396,000l., when, in fact, it was 547,000l. [Mr. Williams: I said that that was the amount.] He had stated the expenses for six quarters to be 396,000l., and that that was the true amount; he had never represented that sum as being the expense for a year. Another observation made in reply to him, and to which he wished to direct the attention of the Committee, was the rate of interest payable on East-India bonds as compared to Exchequer-bills. The hon. Member, however, omitted to state, that the East-India debt was in course of being paid off, that it was about to be reduced by one-half (1,700,000l.). That circumstance of course operated most powerfully upon the rate of interest on India Bonds. A right hon. Gentleman opposite said, he doubted not so much the propriety of raising the interest on Exchequer-bills, but whether the change was made in sufficient time. He knew, that from the moment he took that step he should have to contend with those who objected altogether to such a step; but it was sufficient for him to state that he had not interfered until the state of the Exchequer-bills market at the time demanded an increase of the rate of interest. The hon. Member for Kilkenny, and also his right hon. Friend opposite (Mr. Goulburn), had omitted, in adverting to the state of the debt, to take into account the reductions which had previously taken place as well as the increase of charge which had been occasioned by the 20,000,000l. West-India loan. During the period which had elapsed since he was connected with the Treasury from 1831 up to the present time the reductions which had taken place were very great. From January, 1831, to January, 1832, a reduction in the debt had been effected to the amount of 2,000,673l. In 1833, the 1414 reduction was only 5,600l., in consequence of there being a deficiency of income during a very considerable period of that year. In the following year a reduction of 1,123,000l. took place; in 1835, there was a further reduction of 1,776,000l.; in 1836, a reduction of 1,270,000l.; and in 1837, 1,590,000l.; making a total reduction of about 10,000,000l. in those years. He would therefore say, that in adverting to the increase they were compelled to make to the public debt on any particular exigency, it was but fair they should take into the account the reductions which had been effected within the period to which he had alluded. When his hon. Friend taxed him with not going far enough in the course of reducing the expenditure, he must say it was necessary to be on their guard, lest they should be betrayed into very serious mistakes on that point. He was not going to argue the general question with regard to the expense of our establishments, particularly with reference to the revenue, but he would say boldly his doubt was whether they had not already gone too far. 'raking, for instance, the Excise department, he very much doubted whether, judging from the complaints he had received from many of the traders and manufacturers, that establishment was not under-manned and under-paid, and thereby exposed to those temptations of corruption which it was so desirable should, if possible, be altogether excluded. As to the Customs also, throughout a great part of the country, in Great Britain and Ireland, but more especially in Scotland, in the great importing towns of Dundee, Glasgow, and the ports of the Clyde, frequent representations had been made that the present Customs' establishment was wholly insufficient for the extent of business carried on; and therefore, if for the sake of economy they attempted further to reduce their establishments, so as to hazard the amount of the revenue, they would fall into the old mistake, et propter vitam vivendi perdere causas. At the same time he begged to remind the Committee that there was already a bill on the Table, and he hoped to introduce others which would have the effect, by consolidation and proper regulation, of increasing the efficiency of those departments of the public service. His hon. Friend, in alluding to what he had said in 1836, had undoubtedly stated the figures accurately; but he had given no exaggerated statement of the finances of the coun- 1415 try at that time. On the contrary, he spoke the language of caution. The hon. Member for Kilkenny had adverted to the question of the saving-banks, and he was rejoiced to hear the observations which had been made on that subject by his right hon. Friend (Mr. Goulburn) opposite, who took a just and a right view of the degree of responsibility which rested on this country in respect of the amount of capital which they were liable, under this head, to pay on demand. He was delighted to hear his right hon. Friend say, that he could not contemplate or suggest, as a mode of economy, the looking too narrowly or astutely to the interest which the depositors in saving-banks now received. He did not mean to say, that, under all circumstances of the value of money, their hands were to be tied up from reconsidering that matter, but if ever there was a question which they were bound to approach with the greatest possible mistrust and caution, it was the meddling with the interest which the parties were entitled to receive from saving-banks. It was not to be regarded as a mere matter of figures, though much undoubtedly might be said on the subject in that view; but, regarding it as a means for the encouragement of industry, which necessarily reacted on the revenue in many ways, nothing could be more mischievous than to beget or give a colour to the idea, that when they wished to be economical, they began by violating the good faith of the country, and endangering the property of the poor, by any saving they might effect in reducing the interest payable to the depositors in saving-banks. The hon. Member for Kilkenny had quarrelled with him because he had not gone at greater length into a detailed statement of the exports and imports. It was perfectly obvious that there could not be such a crisis as the country had passed through, their relations with America being wholly deranged, without producing a considerable effect on the export trade and condition of manufactures; but having formerly entered at great length into this general question, and, he feared, exhausted the patience of the House he had not thought it necessary again particularly to advert to it. The hon. Member for Kilkenny seemed also to think, that he should, on the present occasion, have gone into details respecting the precise state of the American trade; but that was surely not the proper time, place, or opportunity for discussing the merits awl effects of the 1416 measures of President Jackson and the other American authorities. Still he could not touch on the subject without paying a tribute which he felt was justly due to the American people and merchants. On a former occasion, in the course of last year, he had said that they (the American merchants) were the depositaries of the public credit and character of their essentially commercial country, and unless they made every effort to discharge their duty to England, they would be cast among the nations of the earth, and endanger all their real sources of future greatness; he felt, therefore, it was no more than fair to say, and he believed every commercial gentleman would confirm his statement, that the efforts of the Americans had been great, and their character had been fully supported. He hoped this would encourage them to persevere in making good all their engagements, and to act up fully to the principles on which they had hitherto proceeded. He did not think his hon. Friend had given him sufficient credit for what he said on a former occasion with respect to the reduction of the interest on Exchequer-bills. What he said was, if the symptoms afforded a likelihood of an advance in the value of money, and if that advance in the value of money in the market generally should have the tendency to reduce the value of Exchequer-bills, they ought to hesitate in reducing the interest. His hon. Friend had adverted to various contingencies which would set at nought all human calculations; but all that he could do was to make the best statement he could in anticipation of ordinary events, and without taking into account the extraordinary calculations which had been alluded to. But in order to give anything like consistency to the views of the hon. Member for Coventry, it would be necessary for him to prove that facts were precisely the reverse of what they now were, that the exchanges were becoming daily more adverse, and that the treasure in the coffers of the Bank of England was diminishing. But so far from that being the case, the treasure in the Bank presented a most favourable contrast to the position in which it stood when the hon. Member for Coventry last year comparing its liabilities with the amount of treasures, declared that it could not pay 2s. 8d. in the pound. If the hon. Member would compare the accounts then with what they now were, his inference must be, not that the Bank was advancing towards depreciation, but that 1417 the state of the currency, as managed by the Bank of England, was much more satisfactory than at that period. This was undoubtedly a large question, too momentous to be incidentally discussed, and requiring the most serious consideration of Parliament; it would be opened on the motion of the hon. Member for Kilkenny, and till then he trusted he was only discharging his duty by reserving what he had to say with respect to it, when it would come regularly before the House. But he must assure hon. Gentlemen, that it was impossible for any one to view this subject more seriously than he did, or with a greater anxiety to have it well, patiently, and wisely considered. At the same time he had observed in discussions upon this question, rather an anxiety in various quarters to recommend favourite theories than to deal with the facts as presented to them. From 1825 up to the present time some new theory had been propounded in almost every discussion which had taken place, in order to do away with all the difficulties of the case. In the time of Lord Liver pool the wild proposition was made for the establishment, without the regulation of Parliament, of joint-stock banks throughout the country, as a remedy for all the evils then complained of; and not many years afterwards as strong an outcry was raised against joint-stock banks, as the grand origin of the commercial difficulties of the country; and it was said, if the joint-stock banks were only put down, all those evils would be remedied. Before the last Charter Act a strong opinion had been entertained by a great number of gentlemen in and out of that House, that it was absolutely necessary to put an end at once and for ever to the monopoly of the Bank of England—that a free trade in banking was as necessary and as useful as a free trade in baking; while it was afterwards maintained, that it was necessary to proceed on an entirely opposite principle, that all competition in banking must be put down, and that the Bank of England should have the universal control over all the monetary system of the country. He only adverted to these points for the purpose of entreating Gentlemen to come to this discussion fairly, not with the view of recommending some particular theory or nostrum, but to consider it as a whole in its extensive and important relations to the commerce and manufactures of the country, in order to devise, if possible, 1418 some improvement of the law in that respect. If they thought by any standard they could set up to revive the golden age, and free trade from all its vicissitudes through alternate excess of speculation and depression, they were mere visionaries; for no state of the currency, no standard, could protect the public from the effects of commercial vibrations. In conclusion, he would again thank the Committee for the attention they had paid him, notwithstanding the very imperfect manner in which he had been enabled to execute his duty.
§ Sir J. Reid
did not rise for the purpose of going into details with reference to the conduct of the Bank of England, particularly as a day had been fixed when he should be quite prepared to enter into the subject and when he flattered himself the Bank would be enabled to vindicate the course which on all occasions it had pursued. He chiefly rose to avail himself of this opportunity of confirming the observations which had fallen from the right hon. Gentleman with reference to America. He did think the conduct of America had been most honourable. From his own knowledge, connected as he was with a very considerable number of merchants, he was enabled to say, that in many cases they made sacrifices to the extent of ten, twenty, and thirty per cent., in order to meet their liabilities to this country. He had often wished to have an opportunity of stating his sentiments on this subject. He felt satisfied, that their debts would be paid, which were now in a course of liquidation and his firm belief was, that the confidence which existed between the two countries, and properly so, would be increased, and the trade between America and England would be greater than ever. With respect to the fault found with the Bank, that Corporation did all it could to promote the interests of the country, and he regretted that it was so often found fault with. But the Bank must bear it.
§ Mr. Easthope
was greatly surprised at hearing the statement made by the hon. Baronet the Governor of the Bank of England as to the present rate of interest on Exchequer-bills. He himself accidentally knew of a large concern, which having had occasion to borrow money on Exchequer-bills had done so at the rate of two per cent. Entertaining the objections he did to the present rate of interest on 1419 Exchequer-bills, he had watched with very considerable curiosity—indeed, he might call it anxiety—to discover, if possible, on what grounds the right hon. the Chancellor of the Exchequer could justify the present rate of interest on Exchequer-bills, in reference to its alleged effect on the extent of speculations; but he had derived no satisfactory information whatever on the subject from any part of the right hon. Gentleman's speech. How the rate of interest on Exchequer-bills could have any sort of connection with the protection of the public from excessive speculations, continued as much a matter of surprise to him as ever. He greatly wished that the right hon. the Chancellor of the Exchequer had directed his observations more to the interesting speech of the right hon. Gentleman, the Member for the University of Cambridge, a speech for which, he begged to say, he most cordially thanked that right hon. Gentleman, looking upon it as he did as one of the most instructive and practical speeches he had ever heard—a speech meriting the attention of Members of the House, and one the merits of which would be highly appreciated out of doors. There was one point on which, of all others, he had expected the right hon. Gentleman near him would have dwelt, namely, the present alarming amount of the unfunded debt. If the right hon. Gentleman was correct in now refusing to reduce the rate of interest on Exchequer-bills, lest this should induce an increase of dangerous speculation, this must be an argument for lessening the amount of the unfunded debt; but for his part, he could not understand any connection between the rate of Exchequer-bill interest and the protection of the public from excessive speculation. The hon. Member for Coventry had stated that a person to acquire a hundred pounds Exchequer-bills must give seventy to eighty shillings, being more than a year's interest; this was in itself pretty conclusive evidence of the interest being higher than the money-market required it to be, and higher than the public need pay in order to protect the Exchequer from any inconvenient application for repayment of the principal. With respect to the rate of interest being kept up so high as to make the premium 70s. to 80s. per cent., in order to protect the public against excessive speculation, it was wholly unintelligible. If the interest were lower, the premium would be lower 1420 but the quantity or amount in circulation would remain the same. That could be no protection which merely put money into the pockets of the fortunate holders of Exchequer-bills. But of all things he wished to direct the right hon. Gentleman's attention to that subject which it was essential should be brought clearly before the House—namely, the alarming amount of the unfunded debt, and he was most anxious to understand what were the reasons which induced the right hon. Gentleman to keep this debt up at a time which appeared most favourable for reducing it. If the right hon. Gentleman was justified by a prospective reference to excessive speculations in keeping up the interest on Exchequer-bills, this was a reason why he should reduce the amount of the unfunded debt, which would be the most effective protection to the public Treasury against some of the evils which generally followed excessive speculation. There was now an unfunded debt of forty-four millions. As to the savings' banks, he quite concurred in all that had been said as to the propriety of keeping up the present rate of interest on the deposits in those banks. Everything which had a tendency to encourage the humbler classes in habits of industry and provident management should now, especially that the New Poor-law Act had come into operation, be warmly supported; but this had nothing to do with the question immediately under consideration. Whatever justification the right hon. Gentleman might have conceived himself to have derived from the crisis of 1836, both in respect to raising the interest and keeping up the amount of the unfunded debt, the danger was past, and he could no longer have the slightest pretext either for keeping up this alarming amount of unfunded debt, or continuing the high rate of the interest on Exchequer-bills, at a time when money was so cheap and so plentiful as at present. Surely, if any prospective fears justified the right hon. Gentleman in keeping up the interest of Exchequer-bills, that was a reason for reducing the amount of them, and when so reduced, which might now be done with advantage, there could then be no possible difficulty in reducing the interest on the remainder. The right hon. Gentleman was, by his present course, incurring a perilous responsibility, which he would at a future time be ill able to meet, 1421 if he were overtaken by any of those calamitous changes to which nations are liable.
§ Mr. A. Yates
observed, that it was the vicious system of paper money in America which had caused much of the distress and difficulty in which both countries had been involved.
§ Resolution agreed to. The House resumed.